GE chief Culp sells biopharma business for $21.4 billion

GE Surges After Agreeing to $21.4 Billion Sale of Bio Pharma UnitMore

GE Surges After Agreeing to $21.4 Billion Sale of Bio Pharma UnitMore

General Electric Company (GE) said on Monday that it had agreed to sell its BioPharma business to Danaher Corporation for a total amount of $21.4 billion, including $21 billion in cash and the assumption of GE's certain pension liabilities.

GE's biopharma business, which provides tools to support biopharmaceutical research and development, brought in roughly $3 billion in revenue in 2018. The company also points out that the net price of the deal will be $20 billion after taking into account for tax benefits.

Shares of GE jumped almost 17 percent before the opening bell Monday.

The company's shares rose 10 percent in response.

Washington-based Danaher said it plans to run GE Biopharma as a stand-alone unit within its life sciences business.

"We view the acquisition as highly strategic, as [Danaher] gains access to GE's coveted bioprocessing assets, where GE is the leader in downstream chromatography, highly complementary to Pall's upstream dominant filtration position - not to mention GE's high margin upstream business in cell culture and single use technologies", Brennan wrote. Culp, who took over as CEO on October 1 of previous year, replacing John Flannery, in January said GE's strategy moving forward "is clear: de-leverage our balance sheet and strengthen our businesses, starting with Power". The mostly-cash transaction is expected to close in the fourth quarter of this year.

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GE will sell the division to Danaher for $21.4 billion, the companies announced.

GE Healthcare has a global installed base of more than 4 million imaging, mobile diagnostic and monitoring units.

Sources have also revealed that GE has put the initial public offering of its Biopharm business on hold until the entire deal is closed. He said management now plans to focus on closing the biotech sale to Danaher this year, while re-evaluating plans for an IPO of the rest of the health-care division, which primarily makes MRI machines and hospital equipment. "To do this, we are improving execution, customer focus, and how we set priorities across GE".

"A more focused portfolio is the right structure for GE, and we have many options for maximising shareholder value along the way", Culp said. On Monday, GE's CDS prices sank to their lowest since mid-October.

The money that will be made from the acquisition will reportedly be used to cut the company's massive debt, which stood at US$121 billion late past year. "It's unlikely we would do something here in the near to medium term". At the end of a year ago, the company's interest-bearing liabilities had ballooned to 110 billion dollars. But its stance changed after Culp was appointed CEO and GE board's became more open to a deal, according to people familiar with the negotiations who requested anonymity to discuss them.

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